Professor Mark J. Perry's Blog for Economics and Finance
WASHINGTON (MarketWatch) - U.S. households socked away most of the extra income they got in January from annual cost-of-living raises, boosting the personal savings rate to 5%, a 14-year high (since March 1995, see chart above, ), the Commerce Department reported today.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
7 Comments:
I think that Rex Nutting at Marketwatch is misinterpreting the data. Personal income rose $45 billion, personal outlays rose $55 billion but personal current taxes declined $138 billion.
Is it an anomaly for tax payments to decline by such a large amount in a single month?
Households spent more than they earned but saved via lower tax payments.
""Savings Rate Rises to 14-year High in January: 5%"
This is not a good thing in the current environment Mr. Perry.
Savings and investment are the foundation for sustainable economic growth.
The numbers are encouraging, but are likely based in fear and uncertainty about the future.
Despite what the Keynesians tell you, we can't spend ourselves into prosperity.
Consumption is a result of prosperity, not its cause.
Savings does equal investment. But when that investment is all going to Treasuries that does not lead to growth unless the government spends.
Stop moralizing Mayfield and think about what you are saying.
But when that investment is all going to Treasuries that does not lead to growth unless the government spends.
This is gibberish. The government competes with the private sector for capital. The reason that savings are "going to treasuries" is because of the current market turbulence. If the government spends this money then it will not be available for private investment in the future. That is why Obama's multi-trillion dollar deficits will slow economic growth. His spending will suck up all the available capital.
Anon,
What do you think will alleviate uncertainty and what would be the catalyst for private capital to leave Treasuries?
Export demand? No
Consumer demand? No
Only government demand can be that catalyst. If not, people will just keep their capital in Treasuries.
mach 999, the only reason people are not investing is because of government.
Perhaps, you have not been watching the equity or real estate market lately.
The bottom line here is if it was not for the uncertainty of the leftist government we would be investing our money in productive enterprises.
The current government despises productive.
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